Late last week, Senators Richard Burr (R-NC) and Angus King (I-ME) introduced the Promoting Affordable Care for Everyone (PACE) Act of 2017. The goal of the PACE Act is to make these tax credits more generous for working and low-income families and reflect the rising cost of child care.
This legislation would update several Federal child care-related tax credits including the Child and Dependent Care Tax Credit (CDCTC) and Flexible Spending Accounts (FSA).
The PACE Act would make CDCTC refundable in an effort to reach low-income families and increase the value of the credit by raising the rate for families at all income levels and creating a new top credit rate of 50 percent that phases down to 35% for higher-income families. Additionally, this bill would index the credit to inflation and assist in making child care costs more affordable.
The Burr/King proposal would also enhance FSAs by increasing the limit of parent's pre-tax dollar contributions from $5,000 to $7,500, and make sure that it's indexed to inflation to keep pace with the cost of child care.
Child Care Aware® of America (CCAoA) supports the PACE Act and applauds the efforts of Senators Burr and King. As families bear the majority of the burden for child care costs, the Federal government should do more to help low-income and working class gain access to quality care. CCAoA believes this legislation would greatly benefit these families as it aligns with our policy recommendations.
You can view a copy of the legislation here.